The size of the Maryland and District payments to black liquor makers is modest for now.
Baltimore Gas & Electric paid about $2.75 for every renewable energy credit, according to Maryland records. At that rate, the renewable energy credits generated in the entire state for the year 2010 would have been worth $7.5 million. In 2011, about $3 million probably went to black liquor producers, McGarry estimates.
But as the renewable requirements scale up to 2020 levels, and as the economy and electricity demand rebound, the price of credits could jump.
Meanwhile, even modest payments could help some paper plants such as the Luke mill, which has invested in upgrading its aging facilities.
“It’s a big deal for this one mill, but in the giant scheme of things, it’s not going to decide whether a windmill farm is going to get developed,” Pitcher said. “What’s the cost-benefit ratio of throwing 100 or 1,200 people out work in counties experiencing the recession?”
Ohio-based NewPage, the current owner of the Luke mill, would not comment.
MeadWestvaco, which owns the Covington Pulp and Paper Mill in Virginia that sells black liquor credits in Maryland, also declined to comment. But the Richmond-based company, which owned the Luke mill before selling it to NewPage in 2005, says on its Web site that 70 percent of its fuel is “renewable.” Although it doesn’t specify, industry analysts say that renewable fuel is virtually entirely black liquor. MeadWestvaco added that it sold 2 percent of this as renewable energy credits. At the rate Baltimore Gas & Electric paid, that would come to about $1.5 million.
McFaul, from the forest-products industry group, said that “although we do not have data to show how much money is collected, we do have some information from member companies indicating that — overall — renewable-energy credit sales represent less than 10 percent of the energy we use.” She added, “Overall, it is not a big source of revenue for the industry. However, for individual mills, it can be, and to remove a significant revenue stream could be harmful to those jobs.”
Local lawmakers who believed the Maryland and D.C. renewable portfolio standards made a difference said questions about the benefits flowing to black liquor have come as a surprise.
“The bottom line as far as I’m concerned: The RPS [Renewable Portfolio Standard] was all about driving the market toward renewable sources of energy, and we need to be going toward clean sources of renewable energy,” said D.C. Council Chairman Phil Mendelson (D), who co-sponsored the renewable energy bill in 2004. “That’s the bottom line, that’s what we need to be driving towards.”
Asked about the language of the bill that included biomass, he said, “You have to think of the context of when we were writing this law. We were in the region at the cutting edge of requiring renewable energy.”
He added, “We expected a lot of opposition from the electric utilities, so we were pushing as far as we could. At first blush, the idea of burning waste to create energy sounds like a good idea. Of course there are a lot of byproducts of the burning that are not good. It was about trying to find that balance to pass the bill. The world has changed a lot over the past decade.”